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The Explosive Trade Deal You've Never Heard Of

February 08, 1998

Washington Outlook

THE EXPLOSIVE TRADE DEAL YOU'VE NEVER HEARD OF

When Congress gets back to business in early February, it will confront a trade agreement potentially as controversial as NAFTA. The accord among the world's 29 most developed nations would rewrite the rules of foreign ownership--affecting everything from factories to real estate and even securities. But most lawmakers have never even heard of the Multilateral Agreement on Investment because secretive talks by the Clinton Administration have been carried out beneath congressional radar.

Multinationals love the deal. They see the MAI as a way to reduce government's growing penchant for profit-robbing boycotts and regulations. Opponents call the MAI "NAFTA on steroids" and warn that it will gut U.S. laws and regulations protecting everything from worker rights to the environment. Lined up against the pact are state governments fearful of losing control over foreign-based businesses; small business; the AFL-CIO; environmentalists; and consumer groups.

Both sides agree that since the Administration hasn't geared up its lobbying--and since Washington is embroiled in a sex scandal--the MAI may turn out to be merely another embarrassing misstep on trade policy. But no one is taking any chances. With talks on the treaty almost completed, according to the Paris-based Organization for Economic Cooperation & Development, the debate is sure to get louder fast.

The accord would bar Congress, state legislatures, and city councils from using trade sanctions to punish nations such as Burma for human rights abuses, violations of labor standards, and religious persecution. Other provisions could limit such investment incentives as enterprise zones while ending minority set-asides and "Buy American" rules, according to opponents. Europeans are hoping that the MAI talks will lead to a lifting of two sanctions in particular: the Helms-Burton Act, which punishes companies that use U.S. property expropriated in Cuba, and the Iran-Libya Sanctions Act, which punishes companies that invest in those nations.

NO HOUSE VOTE. The MAI is tentatively scheduled to be signed at an OECD ministerial meeting in April. Under Secretary of State Stuart E. Eizenstat is slated to head a top-level delegation to Paris in mid-February to straighten out any last-minute hitches. Then, the Administration plans to submit the agreement to the Senate to be ratified as a treaty--bypassing the House, historically a tougher critic of trade deals.

Opponents insist that once its details see the light of day, Congress will be forced to reject the deal. "This won't stand the Dracula test," says Lori Wallach, director of Public Citizen Global Trade Watch, a consumer-advocacy group that has put a copy of the secret draft treaty on its Web site, www.citizen.org/pctrade/tradehome.html.

Yet even with the uncertainties, U.S. negotiators say they will push hard for a deal. Why? U.S. companies want stronger rules protecting U.S. investment overseas and more incentives for luring foreign money into the U.S. But if the White House wants to overcome potential Senate opponents like Jesse Helms (R-N.C.), it will have to start twisting arms--and soon.EDITED BY OWEN ULLMANN By Paul Magnusson in Washington, with Stephen Baker in ParisReturn to top

A BREAKTHROUGH FOR SCIENCE?

A year ago, the science community was crying into its petri dishes. Federal spending for most research was rising slower than inflation--with the prospect of crippling cuts ahead. If that wasn't bad enough, science policy was paralyzed by congressional infighting over whether taxpayers should foot the bill for research that might benefit industry directly.

Now, the outlook for research is looking up. In the Senate, Phil Gramm (R-Tex.) and Joseph I. Lieberman (D-Conn.) want to nearly double the $35 billion nondefense research-and-development budget over the next decade, and colleagues in both parties are embracing their plan. President Clinton made his own pitch in his Jan. 27 State of the Union Address. He called for "the largest funding increase in history" for the National Institutes of Health and the National Science Foundation. "I'm optimistic for the first time in six or seven years," says Charles M. Vest, president of Massachusetts Institute of Technology.

Why the changed political landscape? The strong U.S. economy has not only wiped out the budget deficit but is convincing lawmakers that government R&D spending spurs economic growth.

Also, the proscience camp has been bolstered by Chief of Staff Erskine B. Bowles and other top Presidential advisers. Clinton's former chief of staff, Leon E. Panetta, was always "willing to trade off science for political deals," says one White House official, but the new team has pushed for more R&D. On Capitol Hill, partisan gridlock over science policy has come to an end under House Science Committee Chairman F. James Sensenbrenner (R-Wis.).

Still, that doesn't mean that Congress will start showering money on science. It's not even a sure thing that R&D proponents will win major budget increases for 1999 and beyond. First, they'll have to make a strong case. Otherwise, warns Sensenbrenner, proposals to boost spending could just "get the science community salivating--and then get thrown in the wastebasket."EDITED BY OWEN ULLMANN By John CareyReturn to top